Reg tech
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JC pontificates about technology
An occasional series.
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Any sufficiently advanced technology is indistinguishable from magic.
- —Arthur C. Clarke’s Third Law
Why is reg tech so disappointing?
Document assembly has been around for a good 15 years — they thought it was “Lawyer-killing disruptive technology” in 2006[1] and, well, the cockroaches — we cockroaches — are still here, ladies and gentlemen, and document assembly technology still doesn’t work very well. And nor, for all the promise, do many of the other heralded applications in the vanguard of the reg-tech revolution. The things that were supposed to revolutionise legal practice - put junior lawyers out of work — the chatbots; the natural language parsing; the data-extraction — these applications still seem to be eluding us.
Why?
If advanced technology is magic, then “magic” is in the eye of, and measured from the perspective of, the beholder. When the beholder in question inhabits the legal or compliance department the technology doesn’t have to be awfully advanced to seem magical. Especially in a proof of concept[2]. Your salesguy airily drops “blockchain”, “chatbot”, “natural language processing”, “algorithm” and “AI” into his patter and he will sail through.
And so he does.
Aside: If you want to see real AI and really powerful algorithms at work have a look at modern music production software.[3]. The tech is genuinely ground-breaking, the user interface is designed to be run without interference by the user; the expectation is no software-as-a-service because the software is so intuitive you don’t need any service.
- Allows infinite flexibility: In the olden days you needed a typist with some carbon paper: there was a real cost to manipulating words. You were trained to be economical. Modern information technology allows us to freely manipulate, desiccate, desecrate, defibrillate and duplicate data. A good enough algorithm can, in theory, handle any kind of syntactical complexity, costlessly ingesting and processing the densest textual construction. With a simple cut-and-paste we can replicate, vary and augment at will. But this generates what we call the “Yngwie Malmsteen paradox”[4]: Just because guitar technology[5] means you can play 64th note flattened mixolydian arpeggios at 200 bpm doesn’t mean you should.
- Doesn’t disintermediate: the heat signature of the information revolution is its capacity to disintermediate. Suddenly, any random could publish anything to anyone, free of charge. Teenagers in London could engage manufacturers in Pakistan to produce custom cricket merchandise.[6] Fat middle aged lawyers can partially fulfil teenage dreams to be record rock music and publish it to the world.[7] But, inside the great steampunk Bolshevik machine that is a modern financial services firm, the organisational psychology militates against it. The great orthodoxy will insist on total top-down control in the form a bureaucratic chain of command: procurement, internal IT, management, a process literally intended to remove the optionality, flexibility and improvisational utility that disintermediation promises: whatever value the concept had will be bloated, deprecated, rigidised and commoditised to the point where using it is a chore. An imposition.
- Software as a service: software developers have no greater interest in disintermediating. For intermediation - I beg your pardon: software as a service - is how they take their cut. Their business model is to be a rentier. This would be mire defensible were their products unique, imaginative or excellent, but they tend to be generic and underwhelming.
- Doesn’t provide user flexibility: policy will see to that. The product will calcify, it is too hard, requiring too many approvals and too many business cases to develop.
- Doesn’t provide out of the box usable content: to be usable the will require lawyers, and there are generally precious few of those, and they generally are refuseniks and low-cost-location rent-a-seat types who can follow instructions but aren't any good at writing them.
What none of this does is put useful tools in the hands of the user.
- Don't be a rentier: How do I make money off something which is basically a simple idea that doesn’t require a lot of maintenance? The whole point of this tech is it is meant to be labour saving, right? I can’t do it per unit - the whole point is to eliminate the cost of having meatware do manual, repetitive tasks, and — once you have set it up — there is no actual cost to having a machine do it. So trying to act like a rentier is (a) a dick move and (b) is going to get you killed, because your big idea isn’t that flash, and someone will do it, and undercut you. See Roger Martin’s the The Design of Business: Why Design is the Next Competitive Advantage
- Remember the meatware: If you convert your user experience from “answering nuanced legal questions” into “completing a mandatory questionnaire”, you have lost. Document assembly applications: I’m talking to you. You are trying to make humans behave like machines. That is stupid. Humans aren’t good at emulating machines. Humans are better than machines precisely because they aren’t machine-like. If you have reduced your process to a rules-based questionnaire, you don’t need humans at all. Get a machine to do it - hook it up to the trading system directly.
References
- ↑ See Darrel R Mountain’s OUP monograph on the subject from 2006 “Disrupting Conventional Law Firm Business Models using Document Assembly”
- ↑ One could define the terms of reference of a successful POC as being extensive enough to show off the clever bits, but limited enough to conceal the rubbish.
- ↑ The AI drummer Apple’s Logic Pro X is unbelievable.
- ↑ Spinal Tap’s Nigel Tufnel might have called it the “Jazz paradox”
- ↑ Scalloped frets, flat radii, locking tuners, rectified amplifiers etc.
- ↑ if you want some top cricket gear at great prices hit up @arborcricket on instagram.
- ↑ Dangerboy: potential audience : 7 billion. Actual audience: 1. But that's not the point.